Demand for commercial office space has bounced back in a sign that the market is well and alive despite more staff working from home.

Releasing its latest Office Market Report which covers the six-month period spanning July last year until January, the Property Council of Australia said that net tenant demand exceeded historic averages across all CBD markets Sydney and Brisbane.

Whilst overall vacancies edged up from 11.9 percent to 12.1 percent, this was only because of above average addition of new supply rather than any lack of demand.

(Note: vacancy data is not an accurate measure of the degree to which staff are either working from home.

The data is based on whether or not a lease is in place for the space concerned. It does not measure how many tenants’ employees are physically present in the office or how often they are present.)

Property Council of Australia Chief Executive Officer Ken Morrison says the results defy predictions of a pandemic-led collapse in the market.

Morrison says the comparison with the 1990s recession is stark.

During that recession, office vacancies blew out by 15.6 percent over three years as demand plummeted.

By contrast, vacancies have risen only by 3.3 percent over the past two years since COVID began.

This has happened even as the past two years have seen above average supply additions.

“These are a striking set of figures which illustrate that the office is alive and well in today’s economy, even as the pandemic changes how we use workspaces,” Morrison said.

“While many expected this once in 100-year global pandemic to cause a major spike in office vacancy, these figures show that hasn’t eventuated.

“The reality is that most CBD businesses continue to see the office as integral to their future, and that is reflected in the increased demand for office space over the past six months.”